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Compare Ltd and Umbrella Companies in Latvia

Getting the most out of your new contract will mean figuring out how to comply with all tax and immigration laws, while avoiding as much redundant admin as possible.

The best way to get started on that is to do your research and fully consider your options. One consideration you’ll need to make is comparing Ltd and Umbrella Companies for contracting in Latvia.

Handling personal arrangements when taking on a contract in Latvia

For a lot of contractors, working in Latvia is a big move. What about accommodation? What about language or cultural barriers? What about simply finding your way around and existing in an unfamiliar environment?

You might even be bringing a spouse or family, leaving you little time to also sort out complicated legal and financial issues.

Contracting taxes in Latvia

One of your biggest issues will be figuring out the tax system in Latvia. Additionally, you may also have some tax liability back home.

Making mistakes can cost you earnings, cause legal trouble, or even result in losing the contract. Even something as basic as a client invoice that includes sales tax is carefully investigated before being considered compliant with all laws and regulations.

Common problems for UK Ltd Companies in Latvia

As a contractor, you likely already know about service companies. This type of company works through a limited liability personal company. UK contractors with contracts in the UK often use this option.

However, IR35 rules make this more difficult than it once was. For contracting in Latvia, it can be extremely challenging to use a UK Ltd company to handle the contract.

Simply registering for social security and local payroll taxes is a complex operation, which isn't exactly practical for a single contractor. Rather than simplifying your admin, using your own Ltd Company can just spawn even more issues (see our rundown of the advantages and disadvantages here).

Setting up a Ltd Company in Latvia

Another option is to set up a local Ltd Company in Latvia. However, be aware that directors of Ltd Companies in Latvia are subject to a litany of laws and regulations.

Trying to comply with all of these regulations can seriously distract from your current contract – this can jeopardize your earnings (not to mention your sanity).

Using a Umbrella Company in Latvia

A better option is to work through an Umbrella Company. You’ll essentially be outsourcing the admin and tax issues to specialists.

Perhaps this option’s biggest disadvantage is the fact that the company will charge a fee. However, you’ll likely end up saving more money in the long run: you’ll be able to focus on your contracts, expertly reduce your tax liability, and comply with all laws and regulations (which means avoiding fees, fines, or even worse penalties). When you compare Ltd and Umbrella Companies, the latter generally ends up saving you more in the long run.